Meaning of Working Capital Essay Example for Free

Meaning of Working capital letter EssayWorking upper-case letter refers to the part of total capital which is required for day to day working of the business. The funds are required by the business for conducting its rule-governed operations such as purchase of raw materials of finished goods, payment of wages manufacturing expenses, office and administrative expenses, selling distribution expenses.The funds necessary for making such regular payments of business is called Working enceinte therefore have been defined as the summation of funds necessary to cover cost of in operation(p) the enterprise. The working capital of a business enterprise is measured on the basis of its funds locked up in various current assets such as inventors, accounts receivables and cash bank balance.2.2 Definition of Working CapitalVarious authorities have difined working capital in following manner. (1)Working Capital is the amount of funds necessary to cover the cost of operating the buisne ss enterprise.(Shuibn) (2)Working Capital is the difference between the arrest value of the current assets.and the current liablities.(Hoagland)2.3 Circulating CapitalCirculating capital means current assets of stick with that are changed in the ordinary course of business from into another, as for example from cash to inventories, inventories to receivables and receivables into cash. change rude(a) Receivables MaterialsFinished goods Work-in-progress2.4. Classification of Working Capital 1. Gross Working Capital5. Variable Working Capital2. realise Working Capital 6. Balance Sheet Working Capital 3. Negative Working Capital 7. Cash Working Capital 4. Permanent Working Capital2.5. Sources of Working Capital-The following are the some primary(prenominal) of the sources of working capital.